BSP and CDA join forces for a credit guarantee fund for micro and small businesses
THE Bangko Sentral ng Pilipinas (BSP) has partnered with the Cooperative Development Authority (CDA) to implement the Credit Surety Fund (CSF) Cooperatives Act of 2015 in a move that could pave the way for sustainable financing for small businesses.
The CSF acts as a firm guarantee for loans granted to qualified cooperatives and micro, small and medium-sized enterprises (MSMEs).
“BSP is committed to supporting the development of the CSF as a vital credit infrastructure for the sustainable financing of MSMEs,” BSP Governor Benjamin E. Diokno said in a statement.
The two entities signed the memorandum of understanding last month to formalize the implementation of Republic Law No. 10744.
The CSF fund is generated primarily through contributions from well-capitalized cooperatives and local government units, as well as government financial institutions such as the Development Bank of the Philippines, the Land Bank of the Philippines, and the Philippine Guarantee Corp.
There are 55 CSFs across the country, 14 of which are registered as cooperatives while the rest have pending registration processes with ADC.
“Having a shared responsibility under the CSF law, the [agreement] clearly sets out the respective roles and responsibilities of the parties for proper and effective implementation of the law and the implementing rules and regulations, ”CDA President Orlando R. Ravanera said in a statement.
Based on the law, CDA is primarily responsible for implementing the regulation of registration, monitoring and supervision of CSF cooperatives.
Meanwhile, the BSP should be the spearhead of the promotion; creation and organizational development of CSF cooperatives; facilitate the acquisition by CSF cooperatives of technical assistance; and help CDA to establish criteria and qualifications for CSF cooperatives.
Among the obstacles faced by MSMEs in terms of financing are the collateral requirements. BSP also plans to set up a supply chain finance program that will include an electronic platform where MSMEs can leverage the credit profile of their main clients, which are large companies, to obtain loans. . – Luz Wendy T. Noble